Distribution specialist Bunzl has confirmed trading remains on track with expectations ahead of its half-year results, though the company warned operating margins will fall short of last year’s performance.
The FTSE 100 group expects revenue for the six months to 30 June to rise approximately 4% as acquisitions drive revenue higher. Underlying sales remain broadly flat.
Operating margins are set to hold steady at around 7.0% for the half-year, matching previous guidance. This represents a continuation of pressure on profitability that has weighed on the business in recent quarters.
Looking ahead to the full year, Bunzl maintained its cautious outlook after a warning earlier this year.
While the expects moderate revenue growth in 2025, operating margins are forecast to slip “moderately below” 8.0% for the year, down from 8.3% achieved in 2024. This will be a mild concern for investors, but won’t be a shocok given current inflationary conditions.
“After a shock profit warning in April amid North American weakness, investors are relieved that life hasn’t got any worse for Bunzl,” said AJ Bell investment director Russ Mould.
“The distributor is normally devoid of any drama, simply getting on with the task of delivering essential goods that companies need to do business, but not products they sell to their end customer.
“Rubber gloves, takeaway coffee cups, cling film; the products Bunzl supplies are the sort of things people take for granted. Its fortunes are closely tied to the global economy – if the world is ticking over then Bunzl will be busy but if there is economic weakness it will find life harder.
“Uncertain macroeconomic conditions mean that investors retain a sense of caution towards Bunzl. The shares are only up because there is no further bad news following the recent profit warning, rather than the market becoming more optimistic.”
Management highlighted that second-half margins typically improve due to seasonal factors and should benefit from remedial actions already taken.